Agham bits on power shortage and emergency powers
3 likes1,204 views
The document critiques the Department of Energy's push for emergency powers to address a projected power shortage, revealing that calculations show a much smaller reserve shortfall than claimed. It argues that the perceived energy crisis may be artificially created by private power companies to manipulate market conditions and prices. The solution proposed is to repeal the Electric Power Industry Reform Act (EPIRA), which the authors believe restricts government action to ensure energy security.
Agham bits on power shortage and emergency powers
- 1. 127-B Scout Fuentebella St. Brgy. Sacred Heart, Quezon City Telephone: +632 998 4226 E-mail: secretariat@agham.org URL: www.agham.org AGHAM Bits on Power Shortage and Emergency Powers For several months now, Department of Energy (DOE) Secretary Jericho Petilla has been campaigning for the granting of emergency powers to President Aquino that would enable the government to contract additional capacity to address the supposedly shortage in supply next year. However, during the House Committee on Energy discussion on the joint resolution authorizing President Aquino emergency powers to establish additional capacity held on October 20, it was revealed that while there is no shortage in supply next year but at worst, there would be thin reserves that could be prevented if the power plants would not go into planned and forced outages. The committee concluded that there is no rush to grant emergency powers to the President, no need to contract additional capacities through purchase or rental and that the remaining option that needs to be discussed are the terms and conditions of the ILP program. This adequacy of supply is corroborated by a review of the DOE's data. If the 9,886 MW projected demand for the second week of April, the time where the reserves would be thin, is plotted against the 2013 list of power plants in Luzon, it would show that the fourteen biggest power plants, would be able to supply that demand. Add to this capacity the committed capacity that would be available next year and the additional capacity that private generators have offered for the ILP program, then theoretically, the supply would be able to meet the demand. In this article, Agham - Advocates of Science and Technology for the People’s presents its observations on the issue of energy shortage and the President’s bid for emergency powers based on a review of the data and computation of the DOE. The paper then cautions against a possible power shortage, artificial and real, based on the review of the character of the ownership of the country's power system. Agham then concludes that the answer to the country's energy insecurity is the repeal of the Electric Power Industry Reform Act (EPIRA) which leaves the country's power system in the hands of private companies and leaves the government inept in addressing the shortage. Manufactured Power Shortage by the DOE? On October 20, the House Committee of Energy held a hearing to discuss the joint resolution authorizing President Aquino emergency powers to establish additional capacity to address the looming power shortage in Luzon in 2015. This idea was being insisted by DOE Secretary Petilla even before Aquino delivered the State of the Nation Address and was publicly announced by Aquino in September. However, DOE Assistant Director Irma Exconde presented that, based on their computation, Luzon will only be experiencing a shortfall of 21-31 MW in reserves the first two weeks of April 2015. The National Grid Corporation of the Philippines representative explained that if this worst
- 2. 127-B Scout Fuentebella St. Brgy. Sacred Heart, Quezon City Telephone: +632 998 4226 E-mail: secretariat@agham.org URL: www.agham.org case scenario indeed happen, it would mean one-hour rotating brown outs on peak hours once a week. This scenario is so much different from Petilla’s earlier pronouncements that Luzon could experience a power supply shortfall of up to 1200 MW, which translates to months of outages in 2015. Petilla has been urging the Congress and Senate to grant the President emergency powers to allow the government to contract back-up power at the cost of about 6 billion pesos and compel private companies with generators to participate in the Interruptible Load Program or ILP. The earlier presentation of DOE in the budget hearings said that there would be a shortfall from 180 MW up to 285 MW in the two weeks of April and 37 MW to 100 MW in the last week of May. This shortfall is said to increase if the El Nino is factored in. The reserve was computed by subtracting from the available capacity the projected demand and regulating reserve. This computation is already questionable because the base or the available capacity used by the DOE is way below the reported dependable capacity of the 2013 existing power plants as stated in their website. In the 2013 statistics of the DOE, the dependable capacity in Luzon is 11,519 MW while the peak demand is 8,305 MW, leaving a reserve of 3214 MW. But in the presentation of the DOE at the budget hearing, Luzon would have the lowest available capacity of 8441 MW at the first week of April and the highest supply at 9943 MW. During the Monday hearing, DOE has yet again changed their computation. The officials reported the installed capacity of 12,769 MW and subtracted the dependable capacity of 11,389 MW and subtracted another factor, the planned outage to make up for the existing available capacity. The planned outage is the amount of capacity that will not be online at the projected time because of the planned maintenance schedule of the power plants. They then added the committed capacity or the additional power that is promised to be delivered at that time. (Available capacity = installed capacity - dependable capacity - planned outage + committed capacity). What is questionable in this computation is they introduced another factor to arrive at the available capacity, the forced outage or the amount of power that could possibly be lost because of the unplanned outages of the power plants. The DOE thus have a base of available capacity minus the planned outage and forced outage. (Available capacity = Installed capacity - dependable capacity - planned outage + committed capacity - forced outage) From this available capacity, the additional capacity, as indicated by the private companies who are willing to inject their power in the grid, is added. The system peak demand is then subtracted from this to get the gross reserve. The required regulating reserve is then subtracted from the available capacity to get the net reserve. Values for the required contingency reserve and dispatchable reserve are also included in the presentation but were not subtracted from the gross reserve. In this long computation, the DOE forecasts a shortfall in reserve in the first two weeks of April. The computation of the DOE where the net reserve is gotten (Available capacity + committed capacity + additional capacity) - (Peak demand + planned outage + regulating reserve + estimate forced outage) is different from the computation of the earlier presentation of net reserve (available capacity - projected demand = gross reserve - regulating reserve = net reserve).
- 3. 127-B Scout Fuentebella St. Brgy. Sacred Heart, Quezon City Telephone: +632 998 4226 E-mail: secretariat@agham.org URL: www.agham.org As pointed out by POWER convenor and former Representative Teddy Casino at the hearing, the addition of forced outage as factor on available capacity is based on the assumption that the problems or loss of power of this year, as represented by the estimated forced outage, is going to happen again at the same time next year. Even the projected outage is questionable since it cannot be verified if the loss of power at that time is true and necessary. The forced and planned outage factors are negated by private power producers when asked how much capacity they could provide, the Philippine Independent Power Producers Association (PIPPA) representative stated that they have more than 11000 MW capacities available to supply the power needs next year and would strive for a 100% availability of their dependable capacity. Table 1: Difference of the computation of DOE on Power Shortage at the Budget Hearing and Committee Hearing DOE Computation 1 presented at the Budget Hearings DOE Computation 2 presented at the Energy Committee Hearing on Emergency Powers Variables with Maintenance and Forced Outage and with El Nino With El Nino Variables Available capacity Installed capacity 12769 Dependable capacity 11389 Available Capacity 8721 8135 Capacity less Planned outage 8721 + Committed 542 + Additional Capacity 424 - Estimated Forced outage 712 Available Capacity 8975 Demand Projected Demand 8660 8660 System peak demand 8660 Available Capacity- Projected demand = Gross reserve Gross Reserve 61 -525 Gross reserve 315 Gross reserve- regulating reserve = Net reserve Regulating Reserve 346 346 Regulating Reserve 346 Net reserve - 285 - 871 Net reserve (gross reserve- regulating reserve) - 31 Final required need Contingency reserve 647 647 Contingency reserve 647 Dispatchable reserve 647 Required additional capacity to eliminate Red/Yellow Alerts = regulating reserve + contingency reserve - gross reserve 932 1518 Required reserve = Regulating reserve + Contingency reserve + Dispatchable reserve 1642
- 4. 127-B Scout Fuentebella St. Brgy. Sacred Heart, Quezon City Telephone: +632 998 4226 E-mail: secretariat@agham.org URL: www.agham.org Private companies have also disclosed that on top of this capacity, they offered their additional committed capacities that would come online next year and their willingness to participate in the ILP to avert the power shortage if there ever will be one next year. The potential savings from energy efficiency and conservation efforts are not even factored in the supply. The difference in the news and the computations in the earlier presentation and latest presentation show that there is no definite figure on the amount of shortage next year. The DOE even changed the framing of the shortfall from "required additional capacity needed to eliminate the red alerts" to "required reserves". It seems that the DOE is constantly changing its computation and figures and makes up its assumptions arbitrarily, whichever will look worse. The presentations in the hearing led those attending to the conclusion that there will be no actual shortage in supply next year but at worst, the summer would bring only thin reserves. These could be prevented if the DOE exerts due diligence to ensure that the planned and forced outage would not occur. The committee also stated that there is no rush to grant emergency powers to the President, no need to contract additional capacities through purchase or rental and that the remaining option that needs to be discussed are the terms and conditions in the ILP. The DOE secretary Petilla and the President must give an explanation for issuing confusing statements and threatening the public with a power shortage based on data and computation that they could not even defend. Possible artificial power shortage While the issue on emergency powers has been temporarily parked and no actual shortage in supply has been proven, the consumers and the public are still not safe from an artificial power shortage in the critical summer months next year when the demand is projected to spike as what happened in the 2013 Meralco unprecendented price hike. The removal of supply from the market, where several companies declared outages and maintenance of their power plants while the other plants withheld their supply, created an artificial shortage in supply and raised the price of electricity for the benefit of the rest of the generating companies. Since 85% of the installed capacity of Luzon in 2013, are controlled by Independent Power producers (IPPs), the operations of these power plants are decentralized and private and cannot easily be verified by the public if they indeed go on planned and forced outages next year . Of the 20 biggest power plants that have a dependable capacity of 10598 MW, 33% is controlled by San Miguel Energy Corp, 17% by Aboitiz Power Corp, 15% by Lopezes, 33 % by other corporations and 14% by PSALM/ NPC. Of these power plants, 7 are considered generators that set the price in the Wholesale electricity Spot Market (WESM). These plants are also considered pivotal generators because they could offer any price and yet still be dispatched especially if the demand is high. These plants have a greater opportunity to influence the market price by exercising their market power either through capacity withholding or offering prices above their usual price offers.
- 5. Table 2. List of critical power plants in terms of capacity, owner, market influence and Meralco partnership Power plant Fuel Type Installed Capacity (MW) Dependable Capacity (MW) Registered Name Owner WESM Pivotal and Price Setter generators MERALCO contract Sual Coal 1,294.0 1,294.0 TeaM Sual Corp SMEC yes San Miguel Energy Corp. (SMEC) Ilijan NG 1,271.0 1,200.0 KEPCO (Ilijan Corp) SMEC yes South Premiere Power Corp. (SPPC) Sta. Rita NG 1,060.0 1,036.0 First Gas Power Corp Lopez yes First Gas Power Corp. (FGPC) – Sta. Rita Pagbilao Coal 764.0 764.0 TeaM Pagbilao Corp Aboitiz Power Corp. yes Therma Luzon Inc. (TLI) Kalayaan PSPP Large Hydro 739.2 720.0 CBK Power Compay Ltd PSALM Mariveles Coal Coal 651.6 495.0 GN Power Marivels Coal Plant. Ltd GN Power Mariveles Coal Plant Ltd.Co Malaya Oil Thermal 650.0 610.0 KEPCO Philippines Corp PSALM Masinloc Coal 630.0 630.0 Masinloc-Power Parnters Ltd. AES Transpower Pte., Ltd. Masinloc Power Partners Corp. (MPPC Limay CCGT Gas Turbine 620.0 540.0 Panasia Energy Holdings Inc SMEC yes Calaca Coal 600.0 510.0 SEM Calaca Power Corp. SEM Calaca Power Corp. SEM-Calaca Power Corp. (SCPC) San Lorenzo NG 530.0 523.0 First Gas Power Corp Lopez FGP Corporation (FGP) – San Lorenzo Quezon Power Coal 511.0 460.0 Quezon Power Phils. Quezon Power Phils. Quezon Power Phils Ltd. Co. (QPPL) MakBan Geother mal 442.8 333.9 AP Renewable Inc. Aboitiz Power Corp. San Roque Large Hydro 411.0 411.0 San Roque Power Corp SMEC Magat Large Hydro 360.0 360.0 SN Aboitiz Power, Inc Aboitiz Power Corp. Angat Large Hydro 246.0 135.0 PSALM NAPOCOR TMO Diesel 242.0 150.0 Thema Marine Inc. Aboitiz Power Corp. yes Therma Mobile Inc. (TMO) Bauang DPP Diesel 235.2 180.0 1590 Energy Corp 1590 Energy Corp. yes Tiwi Geother mal 234.0 207.9 AP Renewable Inc. Aboitiz Power Corp.
- 6. 127-B Scout Fuentebella St. Brgy. Sacred Heart, Quezon City Telephone: +632 998 4226 E-mail: secretariat@agham.org URL: www.agham.org According to the 2013 WESM annual report, the most frequent generator which qualified as price setter and pivotal generator in the billing period of April 2014 is oil-based power plant Baunang DPP of 1590 Energy Corp which became such 103 times. This is followed by coal- fired power plant Sual CFTP of SEMC which became such 31 times. Other plants which are price setters and pivotal power generators are Pagbilao CFTP of Aboitiz, and natural gas plants Kepco Ilijan of SMEC and Sta. Rita FGPP of the Lopezes. Oil-based power plants, Subic Power Corp, Limay CCGT, Thermal Mobil and TransAsia are also considered influential in the WESM. Of these 9 plants, 5 companies have Power Supply Agreements with Meralco. In the billing period of November 2013, where the unexplained forced outages occured, San Miguel Energy Corp. (SMEC) supplied the highest average cost Php15.5527/ kWh, followed by Therma Mobile (TMO) of the Aboitiz, at Php 6.2030/kWh. The Sta. Rita Plant of Lopez, the South Premier Power Corp (SPPC), Quezon Power Phils Ltd, FGP Corporation (FGP) of San Lorenzo power plants had an average generation cost of more Php5/ kWh. These 5 companies, along with the contracts and sources of Meralco has an average generation cost of Php 5.6673/ kWh for the billing period of November 2013. This generation cost could go up again dramatically if Meralco source its supply from WESM as what it did in the last quarter of 2013. Repeal EPIRA This leaves the question on how would the consumers be protected from power shortage, artificial or real, and market manipulation. On the one hand you have a government, who instead of doing its mandate of ensuring affordable, reliable and adequate supply of electricity has been painting doomsday scenarios to bully consumers and lawmakers into measures that would serve whatever interest they have on emergency powers. On the other hand, you have owners of power plants who collude and could create a repeat of the November 2013 supply situation that brought us the massive increase in power rates at that time. The Filipino consumers must guard against both and instead of giving in to the threats of power shortage, we could push for the repeal of EPIRA and hold the government accountable for ensuring energy security in the country. The yearly power shortages can be prevented if the government would be able to put electric power plants online in a planned and predictable manner. Under the EPIRA, except through the emergency power clause, the government is helpless in this case. To avoid this chronic problem, the solution is not to manufacture crises but to dispose of the EPIRA law altogether.#